Standing Committee B

[Mr. Bill O'Brien in the Chair]

Armed Forces

(Pensions and Compensation) Bill

Bill O'Brien: I welcome everyone to this morning's sitting, and in so doing I appeal to them to ensure that mobile phones are switched off.Clause 5 Amendments to Pensions Appeal Tribunals Act 1943

Clause 5 - Amendments to Pensions Appeal Tribunals Act 1943

Gerald Howarth: I beg to move amendment No. 15, in
clause 5, page 2, line 42, at end add—
 '(2) The Secretary of State shall reimburse a claimant for his reasonable expenses in taking his case to appeal under this section.'.
 Thank you for that reminder about switching off my mobile phone, Mr. O'Brien. The clause deals with the pensions appeal tribunal and the amendments necessary to the legislation providing for it. We welcome the Under-Secretary of State for Constitutional Affairs, the hon. Member for Tottenham (Mr. Lammy)—I know that he will deal with the detail of the changes and we look forward to hearing what he has to say. The amendment is specific and it would impose an obligation on the Secretary of State to reimburse a claimant for his reasonable expenses in taking his case to appeal. It concerns an important issue, which my hon. Friend the Member for Canterbury (Mr. Brazier) will deal with in greater detail. 
 The Government are relying on the generosity of the voluntary sector, particularly the Royal British Legion, to support claimants in their detailed cases against the Government. The proposed changes, including the introduction of another tier of appeal, will impose substantially increased burdens on the voluntary sector. Although we accept that there may be a case for the social security commissioners having a role, we have been informed by the Royal British Legion that that will result in an increased work load for it. 
 My hon. Friend will correct me if I am wrong, but I believe that the Ministry of Defence website encourages appellants to approach the Royal British Legion. That is bizarre. I wonder what the reaction would be if the general public were aware that those who want to appeal against their pension entitlement award, having served in Her Majesty's armed forces, have to pay out of their own pocket or get support from a charitable organisation rather than the Government. Everyone has a warm feeling about the 
 Royal British Legion—they associate it with the poppy appeal and Remembrance Sunday—but about £500,000 of its money, raised through the blood, sweat and tears of its members throughout the country, is expended on providing support and advice that should come from public funds. 
 The Royal British Legion has a relatively small and stretched staff: my hon. Friend will set out some precise figures on what it is engaged in, but I shall try to give the Committee some idea of that too. Everybody will accept that it is not just to continue in this fashion, and I hope that the Committee will take a careful and considered view of the matter to judge whether the issue can be resolved. An amendment to a later clause deals with aftercare issues, and I shall explore that matter at greater length then. I want to make it clear that about 93 per cent. of cases that go to appeal are funded by the Royal British Legion, and it is simply not acceptable that such money has to be found from charitable sources. I do now know whether the Minister is alive to this issue. He is indicating from a sedentary position that he is, so I hope he addresses it.

Shona McIsaac: I thank the hon. Gentleman for giving way, because I have been listening with interest to what he is saying. Can he tell me—I do not the answer—what happens with other public sector workers, such as those who work in health, local authorities and education? If they appeal, are they funded out of the public purse?

Gerald Howarth: I do not know whether other public sector workers are funded out of the public purse, but that is not our concern here today. Our concern is with Her Majesty's armed forces, and as we have discussed on many occasions in this Committee and on the Floor of the House, there is a strong sense in which members of the armed forces are a special case, because they put their lives on the line for their country.

Julian Brazier: My hon. Friend is right to say that the armed forces are different. I recently dealt with a case in which a teacher was appealing for an interim award following an assault by a pupil. The teacher was able to go to his own GP with his own medical records and his own evidence from the hospital casualty department where he was treated. The point about the armed forces is that all those matters are handled in-house by the body against which members of the services are appealing.

Gerald Howarth: My hon. Friend makes an important point. We shall specifically address it when we discuss medical records, so I do not want to trespass on to that territory now. I am desperately searching my notes for some individual details relating to the Royal British Legion, but I regret that I cannot immediately lay my hands on them. Suffice it to say that we feel that the Government must address the issue, as it has not been addressed. The Minister has indicated from a sedentary position that he is alive to the issue and that he will address the Committee, so on that basis I hope we can proceed with a constructive debate to ensure
 that something can be done to alleviate the burden that is falling disproportionately on one of the nation's favourite charities.
 If the public knew that a lot of the money that they spend on the poppy appeal goes to fund people who are challenging the Government over their pension entitlement, I think that a degree of anger would be shown that would not reflect favourably on the Government's standing in the country.

John Robertson: I do not want to speak for long, but I have some questions that I know Opposition Members will be able to answer, because they are more experienced in these matters than me. Having listened to confrontations and exchanges in previous sittings, I am somewhat in a quandary over the amendment. It appears to be a blank cheque: any appeal would receive finance, even if it was just someone's attempt to see whether they could get something. That would clog up the system. In view of those circumstances, the amendment is flawed.
 I gather from the Opposition's remarks at previous sittings that they want to stop the judicial use of the Government's and taxpayers' money, but the idea of the blank cheque, if my interpretation of the amendment is correct, contradicts that. However, I am slightly concerned about the British Legion and the money that it has to put forward, and I have some sympathy with the remarks made by the hon. Member for Aldershot (Mr. Howarth). As an honorary member of the legion who does various bits of work for it up in Scotland, I understand its reservations. Although I am sympathetic, I also have to look at the financial situation, so I could not support the amendment in this form.

Shona McIsaac: Does my hon. Friend share my concern that although there is great sympathy for the British Legion, there could be a lawyers' feeding fest if the amendment is accepted? They would take up cases on behalf of other public sector workers and cite that provision as a reason why everyone working in the public sector should receive public funds if they take an appeal to a tribunal.

John Robertson: My hon. Friend makes a good point. I would at all times say, however, that the armed services are a different case entirely. They do not have a trade union to represent them; the British Legion is effectively their trade union. She makes a valid point about a charter for lawyers—they are not people who I have great sympathy for—so I will be interested to hear what the Minister has to say.

David Lammy: I am pleased to be here this morning to assist the Under-Secretary of State for Defence, my hon. Friend the Member for Hove (Mr. Caplin), and to represent the Government as a Minister at the Department for Constitutional Affairs on the important matter of the tribunal arrangements for our armed services. The
 Government agree with the spirit of the amendment. We feel that the reasonable expenses of claimants should be met when taking a case to appeal. In that regard, we are introducing an amendment to clause 7, which I will get to in due course.
 I want to explain what is available to people when they make applications. Both the pensions appeal tribunal and the social security commissioners provide for the expenses of claimants incurred in the course of a hearing. Accommodation and travel expenses are met, and the detail is set out in the pensions appeal tribunal rules and the procedural regulations under the Social Security Act 1998. The cost of rail travel or car mileage is paid. Subsistence is paid at a rate of £4.25 for five to 10 hours away from home. Overnight accommodation in London is also paid. 
 The community legal service—what some might think of as legal aid—can assist people in meeting other expenses incurred when taking a case before a tribunal. For example, the legal help scheme can provide up to £500-worth of assistance from a solicitor in preparing papers for appeal. However, the Government do not consider legal representation in front of a tribunal to be necessary. As my hon. Friend the Member for Cleethorpes (Shona McIsaac) mentioned, the general nature of the tribunal system, whether it involves a social security or an employment tribunal, is that people represent themselves.

Julian Brazier: The Minister is rightly using the natural structure of employment tribunals as a parallel, but will he address the central point that at any other tribunal workers would naturally look to their trade union representative to act as the point of contact and as their advocate? A Conservative Member should not have to point that out to a Labour Minister. Members and former members of the armed forces do not have such a figure available, which is why the British Legion is paying out £500,000, and those bills will rise because the Minister is extending the process.

David Lammy: The legislation, which will bring into force the proximity of social security commissioners as the point of appeal from the PAT, is a direct consequence of Sir Andrew Leggatt's report, which was published in March 2001. It was the most comprehensive review of the tribunal system for 44 years. The report, entitled ''Tribunals for Users: One System, One Service'', recommended to Lord Chancellors that tribunals should have a second tier of appeal. To that extent, we are bringing current arrangements for armed services personnel into line with the report's recommendations.
 In the report, Sir Andrew Leggatt and his committee, which was made up of distinguished members, largely reiterated established practice on legal representation, saying in paragraph 7: 
 ''Tribunals are intended to provide a simple, accessible system of justice where users can represent themselves. So it is discouraging to note the growing perception that they cannot. Every effort should be made to reduce the number of cases in which legal representation is needed.
 Logically that can only be done by seeking to ensure (a) that decision-makers give comprehensible decisions, (b) that the Tribunals Service provides users with requisite information, (c) that voluntary and other advice groups are funded so that they can offer legal advice, and (d) that the tribunal chairmen are trained to afford such assistance as they legitimately can''. 
To that extent, I reassure hon. Members that the social security commissioners will act in that way. They will be able to bring to bear the specialism that they have built up, and people will be able to represent themselves.

Desmond Turner: What the Minister says is true in theory, but unfortunately not in practice. For example, in social security tribunals, the average success rate of appellants without advocacy is about 50 per cent. My office runs an advocacy service for social security appellants and our success rate is 95 per cent. We are not lawyers, although we are probably far more effective in this context than they are.
 A sensible advocacy service is needed—it does not have to have bells and whistles or to cost a lot. I hope the Minister will assure us that reasonable advocacy arrangements can be provided.

David Lammy: In response to my hon. Friend's point, we should put the matter in context. Under the new arrangements, the social security commissioners will replace the High Court, which was the only point of appeal from the PAT. For the first time, there will now be a further right of appeal to the higher courts—the Court of Appeal and the House of Lords. Only about 20 cases a year go beyond the PAT and more than two-thirds of them are appealed on the papers, not at oral hearings, although people can request a hearing should they need one.
 As I said, the nature of our tribunal system is such that people should be able to represent themselves informally. My hon. Friend will know from experience that chairmen and commissioners conduct tribunals in an inquisitorial way, to counter the adversarial nature of the court system. He will also know that the tribunal system arose after the war with the growth of the state. The Attlee Labour Government set up the tribunals to make it easier for specialism to grow in particular sectors of the state, for example in benefits, employment and in the area that we are discussing. Sir Andrew Leggatt recommended that there should be a second tier of appeal to correct decisions that tribunals get wrong.

Eric Joyce: I understand and accept much of what my hon. Friend says, at least about the principle of self-representation, but I also agree with my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) that representation advocacy that lacks bells and whistles has its merits. In my modest experience, it increases people's success at other types of tribunal. There would be nothing to prevent ex-members of the armed forces being represented at the PAT, as they would be at an
 industrial tribunal, by their new trade union or the trade union of which they were a member while in the services, even though the MOD did not recognise it.

David Lammy: In an oral hearing before a tribunal or in a written application, the applicant relies on the community legal service for assistance in preparing the case, and we heard about the wonderful role played by the British Legion in that respect. I emphasise that we are talking about a few cases that are appealed upwards. Legal help is available for those who need it, but in essence tribunals are intended to operate without legal counsel.
 I should also say that in establishing the new arrangements, we expect the social security commissioners to be sitting specifically as pensions appeal commissioners, as is appropriate. They have expertise, as seven of the social security commissioners have experience of the pensions appeal tribunal and the important and special matters that the hon. Member for Aldershot was keen to illustrate. However, the Government are sympathetic to the thrust of the amendment.

John Cryer: Like some of my hon. Friends, I have concerns about the issue. It has been predicted that the number of cases will rise, which may or may not be true. Will the Minister undertake to monitor the number of cases and to return to the question if there is a change in their number or nature?

David Lammy: The pensions appeal tribunal case load has been small compared with the other matters that social security commissioners consider, including child support, decisions for vulnerable lone parents, general pension matters for older people and appeals on serious accidents at work. The commissioners are specialists, and the number of appeals in the other areas is significantly higher than in pensions appeals tribunals. I am happy to keep an eye on the figures in the next few years to see how the new system is working and to record them in Hansard as is appropriate. However, all the signs are that the numbers will remain about the same, that the necessary specialism lies in the tribunal and that legal help is available to those who need it.
 As I have said, the amendment has drawn attention to a drafting oversight whereby the expenses of regime of the commissioners has not been extended to appeals to the PAT. We have responded with a Government amendment, and an amendment to the Social Security Act 1998 is to be included in clause 7, which deals with appeals and amendments. I shall discuss it at the relevant time. 
 Given my comments, I invite the hon. Member for Aldershot to withdraw his amendment.

Gerald Howarth: I am sure that Members on both sides of the Committee are grateful to the Minister for his positive response to our expressions of concern. It is significant that three Labour Members made contributions and stated their concern.
 I am grateful to the Minister for acknowledging the merit in our case and for undertaking to examine it. The hon. Member for Brighton, Kemptown made a 
 telling point in noting that there was a 50 per cent. success rate in cases without an advocate while the rate was bumped up to 95 per cent. with an advocate. I am not sure what form of advocacy the hon. Gentleman was offering and whether it was through his parliamentary office or just himself. I am sure that he would not have been on commission for that, but I am equally sure that his constituents, for whom he secured such success, would have been more than willing to have made some contribution towards his office cost allowance, although we know that that is not possible. It was, however a turning point. We welcome the fact that the Minister has taken the matter on board. 
 It would be helpful to know how many commissioners have had service experience. It would also be interesting for the Committee to know whether the Minister intends to give some sort of instruction that would ensure that those hearing the appeals are familiar with the particular circumstances that affect ex-service personnel. I hope that the Minister will respond to those points. 
 The Minister also mentioned that assistance was available, and set out the details on accommodation, travel and subsistence. I am not sure what one would get in London for less than five quid for eight hours of attendance—it might buy a cappuccino. The important point, however, is that the information that the Minister gave does not appear to be on the Veterans Agency website. Given that the Minister for Veterans is sitting beside the Minister from the Department for Constitutional Affairs, perhaps the two Ministers might get together during the break in our proceedings, to ascertain whether it might be possible for the website to incorporate some of the information that was given to the Committee this morning. That might help the appellants and the Royal British Legion. 
 I agree with the Minister's statement that he does not want to encourage legal representation at tribunals. That would be a retrograde step. I am in favour of keeping lawyers out of as much as possible, given the amount that they charge. Having had personal experience of such matters, I believe that lawyers are a very expensive commodity. 
 I shall declare an interest, although I do not have to, and say that my son has just joined that profession. He has done so only out of affection for his father, however, to ensure that he is able to maintain his father in retirement in the style to which he would otherwise not be able to become accustomed, after having served a number of years in the House of Commons. It would therefore be unfair of me to denigrate the legal profession. None the less, lawyers are expensive and I suspect that there is a degree of common ground on both sides of the Committee that it would be better for the tribunals if appellants did not have legal representation. 
 I am grateful to the Minister for giving the Committee the assurance that he will look into these matters. I hope that, after discussion with the Minister for Veterans, he will put some information on the 
 website. I also hope that he will consider the possibility of assisting the Royal British Legion through some sort of specific arrangement, such as a grant in aid. The hon. Member for Glasgow, Anniesland (John Robertson) made the fair point that we do not want to have a blank cheque, so that everyone is encouraged to lodge appeals because there is Government money available. 
 As we in the Committee know, there is no such thing as Government money: the money is taxpayers' money to which we and all our constituents have contributed. Ministers might like to consider the possibility of making such a grant in aid, which could be specifically ring-fenced, to assist the RBL and others who are engaged in that charitable work. 
 On the basis of the constructive response that the Minister has given to the Committee, and bearing in mind that we have tabled other amendments in which such matters will also be addressed, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 5 ordered to stand part of the Bill.

Schedule 1 - Amendments to Pensions Appeal Tribunals Act 1943

Julian Brazier: I beg to move amendment No. 16, in
schedule 1, page 5, line 5, at end insert—
'( ) (1) Section 1 (Appeals against rejection of war pension claims made in respect of members of the naval, military or air force) is amended as follows.
 (2) After subsection (1) there is inserted—
 ''(1A) A member of the Armed Forces may elect to have an appeal of a claim under this section considered by the Pensions Appeal Tribunal without the claim having first been referred to any Internal Dispute Resolution Process established under the Armed Forces (Pensions and Compensation) Act 2004.''
 (3) Section 2 (Appeals against rejection of war pension claims made in respect of mariners, pilots, etc) is amended as follows.
 (4) After subsection (1) there is inserted—
 ''(1A) A member of the Armed Forces may elect to have an appeal of a claim under this section considered by the Pensions Appeal Tribunal without the claim having first been referred to any Internal Dispute Resolution Process established under the Armed Forces (Pensions and Compensation) Act 2004.''.'.

Bill O'Brien: With this it will be convenient to discuss the following amendments:
 No. 20, in 
schedule 1, page 5, line 5, at end insert— 
 '( ) (1) Section 1 (Appeals against rejection of war pension claims made in respect of members of the naval, military or air forces) is amended as follows. 
 (2) After subsection (3) there is inserted— 
 ''(3ZA) Where the Minister has received notification from the claimant of the claimant's wish to appeal whether or not that notification was received before the Minister notified the claimant of his decision under— 
 (a) this section, or 
 (b) a scheme mentioned in section 1(2) of the Armed Forces (Pensions and Compensation) Act 2004 (compensation schemes for armed and reserve forces) 
 the appeal shall lie to the Tribunal.''
 ( ) (1) Section 2 (Appeals against rejection of war pension claims made in respect of mariners, pilots, etc) is amended as follows. 
 (2) After subsection (2) there is inserted— 
 ''(3) Where the Minister has received notification from the claimant of the claimant's wish to appeal whether or not that notification was received before the Minister notified the claimant of his decision under— 
 (a) this section; or 
 (b) a scheme mentioned in section 1(2) of the Armed Forces (Pensions and Compensation) Act 2004 (compensation schemes for armed and reserve forces) 
 the appeal shall lie to the Tribunal.''.'. 
No. 17, in 
schedule 1, page 5, line 15, at end insert— 
 '(4) After subsection (2) there is inserted— 
 ''(2A) A member of the Armed Forces may elect to have an appeal of a claim under this section considered by the Pensions Appeal Tribunal without the claim having first been referred to any Internal Dispute Resolution Process established under the Armed Forces (Pensions and Compensation) Act 2004.''.'. 
No. 19, in 
schedule 1, page 5, line 15, at end insert— 
 '( ) After section 3 there is inserted— 
 ''3A Retention of Right to Appeal 
 (1) Where the Minister accepts any claim under— 
 (a) sections 1, 2 or 3 of this Act; or 
 (b) a scheme mentioned in section 1(2) of the Armed Forces (Pensions and Compensation) Act 2004 (compensation schemes for armed and reserve forces) 
 the claimant retains the right of appeal to the Pensions Appeal Tribunal. 
 (2) Any appeal under subsection (1) above may consider the level of tariff attributable to the claim.''.'.

Julian Brazier: I am grateful, as is my hon. Friend the Member for Aldershot, to the Royal British Legion for the briefing that it provided, setting out some of its concerns in this area.
 The Minister used the word ''context'' two or three times during his explanation of the previous amendment. During consideration of these amendments, it is important that the Committee bears in mind what the context often is: an injured or sick former member of the armed forces—a man or woman with no trade union to which they can refer, and whose medical records are all controlled by their employer, and somebody who has very few friends apart from in the voluntary sector. That sector survives on the contributions raised from the public. As my hon. Friend said a moment ago, I doubt whether many people who buy poppies realise how much of their money is used to assist people to put appeal cases together. 
 In the light of these amendments, it is worth considering the figures in respect of what the legion is handling. Representatives told us that they represent 93 per cent. of appellants, whether legion members or not, and they do so for free—not, of course, free for the legion, but free for the appellant. They are concerned that the process will be enveloped by the general pension system. They confirm that 40 per cent. of their case load represents entitlement appeals; 33 per cent. are assessment appeals; and 16 per cent. are appeals made by widows of those who served in the second world war, even after all these years. They have a 
 budget of £500,000, two thirds of which is spent on free representation for those wishing to take RBL cases to tribunal. Their representative, Tom House, wrote in an e-mail: 
 ''The proposal to add yet another tier for arbitration, that of commissioners''— 
that is what we are debating in respect of the first two amendments— 
''would put further onus on us to provide a service that does not exist now. We the Legion represent currently 93 per cent. of represented cases at tribunal inclusive of Northern Ireland. Unless some step is taken to support War Pensioners etc before the SSC, the scene might be left more or less to the MoD.'' 
One need hardly add that that would not be good for the appellants. 
 We shall return to the legal aid issue, which affects a much larger number of cases, when we get to amendment No. 21 shortly. When we debated the previous amendment, the Minister rightly said that a relatively small number of people are involved. Our concern here is particularly with amendments Nos. 16 and 17. The legion confirms that the new scheme proposes not one, but two, further tiers of litigation. The first is the internal dispute resolution process, which has two tiers: the first stage gives the member the right to complain about a decision made by the scheme's administrators. The decision on complaints will be made by the assistant director of pensions casework of the Armed Forces Personnel Administration Agency. That decision, called the notice of decision, should be made within two months of the receipt of the complaint. 
 The notice of complaint will include an explanation of the decision, advice that the appellant has the right to refer the decision to the two-star panel within six weeks—these are all tight time limits and people may not be well, for example—and further advice that the Occupational Pensions Advisory Service is available. 
 The second stage provides the appellant with the right of appeal to a higher level against the decision made at the first stage. Such an appeal must be made in writing within six months of the notice of decision. It is my experience of casework, incidentally, that letters often get lost at the various stages. In such an appeal application, information given at the first stage must be repeated along with reasons why the appellant believes that the first stage decision must be reconsidered. A decision on the second stage is usually issued within two months of the original receipt of the complaint. Ironically, the House of Commons Library brief tells us not only that there is a lack of detail about pension appeals in the Government proposals, but that in the Government's March 2001 document, ''Joint Compensation Review'', the following remarks appear: 
 ''We attach importance to ensuring that those who are in any way dissatisfied with decisions taken by the administrators of the scheme, have access to a fair and independent system of appeals. This is central to Human Rights and Fairness at Work. Both the WPS and AFPS have dedicated appeals systems. The former''— 
we are dealing with its equivalent here— 
''provides for an independent Pensions Appeals Tribunal (PAT), which is the responsibility of the Lord Chancellor's Department, with a right of appeal in certain circumstances to the High Court''.
I apologise to the Committee because this is very complicated. However, one of the legion's main concerns is indeed that the matter is so complicated. The document goes on to state: 
 ''As the new scheme would not be a part of the Armed Forces Pension Scheme, it would not be appropriate for appeals to be resolved through IDRP''. 
Yet the Government propose that appeals should be resolved through two stages of IDRP. Therefore, before appeals can even reach the PAT, they must go through those two IDRP stages. Our amendments Nos. 16 and 17 propose that people could go straight to the PAT, which appears to be the Government's own recommendation from 2001. In a way, we drafted those amendments to help the Government by reminding them of what their position appears to have been. 
 When making more general remarks in an earlier debate, I tried to paint pictures of two cases involving my constituents, who are men who bravely served in the armed forces. I looked at the case of Major Allen, who was severely wounded in Burma. Frankly, after reading his modern medical reports, I consider it a miracle that he is still alive. The other case involved a sergeant-major who had mental health problems after long and extended service in a number of theatres. They had enough of a battle going through the existing system, so can we imagine what it would be like if they also had to go through all this nonsense? There would be two extra tiers of the independent dispute resolution procedure, with sharp cut-off dates at every point and a requirement to keep on repeating information from the first to the second stage. That seems to be a very shabby way to treat our armed forces. 
 Sometimes there is a temptation in Committee to bang on and on about a point, but it seems to me that the case here is so overwhelming that nothing could be added by my going on and on producing examples. The fact is that the Government are making the appeal process hugely more lengthy and complex for people to use. 
 Before moving on briefly to the last amendment in the group, I will add one further thought. The Government cannot completely close the bar on people going to court, which is recognised as a fact. We are developing a litigation culture, about which I know many Committee members are unhappy. Next Friday when I speak to my private Member's Bill, I hope to take some money away from litigation lawyers—if the talks with colleagues of Labour Members continue—and to give some protection to voluntary organisations against being unreasonably sued. 
 The fact is that by introducing this long, complicated internal process we are simply encouraging members of the armed forces not to talk to the British Legion or go through the tried and tested system, but simply to say, ''We've had enough. We're going off to a human rights lawyer and we're going to court.'' I suspect, in the long run, that the legislation will end up costing the Government more money and acting as a cancer within the bonds of comradeship 
 that hold the armed forces together. Every time that such a case is fought, it has a negative effect on morale in the armed forces. 
 I will briefly discuss amendment No. 19, which is the last amendment in the group. It raises a complicated point, and I am grateful to the British Legion for digging it out. The word ''rejected'', which appears in the legislation, does not appear to offer enough scope for appeal. That is why the amendment would ensure that there is scope to appeal even where a claim has been accepted. That ties into debates elsewhere on issues such as tariffs. The Royal British Legion has pointed out that a claim over a back injury could be treated at several different levels to which different tariffs apply, so the Secretary of State could accept a claim within the meaning of the legislation, but offer far too low a rate because the claim had been accepted at a different level from that involving the medical evidence. Therefore, there could be a nonsensical dispute about the label under which a claim had been accepted, because of the different tariffs. The amendment would restore the right to appeal in circumstances in which a claim had been accepted in theory, but at a derisory level. 
 The Government are replacing a relatively simple system with an extremely complicated one. For reasons that the Opposition have endlessly presented to the Committee, even under the current, simple system, it is difficult for former members of the armed forces and their voluntary advisers, where they have them, to pursue cases. Adding all these extra tiers, without any opportunity for a short cut, is surely letting down people who have served their country well. I urge the Committee to support the amendments.

Ivor Caplin: I am pleased to respond to the arguments made by the hon. Member for Canterbury in support of the amendments. It might be helpful if I go through the amendments one by one, as he did, and deal with the issues as I see them.
 If I have understood correctly, amendment No. 16 would ensure that a right of appeal lay against the initial decision on a claim under the new compensation scheme. If that is the case, there is some misunderstanding, which I hope to clear up. We propose to amend section 5A of the Pensions Appeal Tribunals Act 1943 to introduce rights of appeal to the tribunals that we have discussed this morning under the new armed forces compensation scheme, but not to disturb any existing rights to appeal under the war pensions scheme. 
 The amendments appear to confuse the existing rights under the war pensions scheme with those proposed under the new compensation scheme. Sections 1 and 2 of the 1943 Act apply to rights of appeal against decisions to reject claims for war pensions under the war pensions scheme. We do not propose to introduce an internal disputes resolution procedure to that scheme. I hope that that helps the hon. Gentleman.

Julian Brazier: I am grateful to the Minister and, as ever, make the Opposition's point that if there is a technical defect in the drafting, we are happy to recognise that; this is such a complicated area. The central issue behind the amendments is that we are concerned that new claimants under the new scheme should not be forced to go through a two-stage internal dispute resolution procedure before they can get to the PAT.

Ivor Caplin: After listening to the hon. Gentleman, I shall try to help him a little more. Of course, there will be an internal process for the Veterans Agency to consider claims or, possibly, to review them. I thought he would have expected that.
 We have not reached a final conclusion about whether that system will have one or two tiers. I would probably prefer a single-tier system; pensions appeals are moving in that direction in general. However, it would be entirely right and proper for the Veterans Agency to check internally that no errors had been made before the individual took the claim to the independent appeals tribunal. I do not understand why the hon. Gentleman should be against such an internal check of the agency's work, particularly if it is done before the matter goes to tribunal. We are not asking people to face a tribunal at that point. There will merely be an internal check to determine whether the claim and the paperwork connected with it is correct. I do not understand why he continues to make that point about amendment No. 16.

Julian Brazier: I can help the Minister.

Ivor Caplin: The hon. Gentleman can try if he likes.

Julian Brazier: I am happy to do so as the Minister is obviously in a characteristically helpful mode. I am delighted to hear that he may go for a one-tier system, but the fact remains that even a one-stage system will be hedged about with various time limits and so on. If a possibly sick and confused member of the armed forces drops the ball at that stage, he may never get as far as the PAT.

Ivor Caplin: I will outline my thoughts on the other amendments in the group, as I hope to bring the matters together. It is obvious where I am heading in respect of the amendments, but I am happy to entertain the hon. Gentleman in a debate.
 As far as I understand it, the purpose of amendment No. 17 is to make the right of appeal lie against reconsiderations resulting from the internal dispute resolution process. The process proposed in the Bill reflects current best practice. That practice has been adopted by other jurisdictions, such as the criminal injuries compensation scheme, so it is in line with the criminal injuries process in the UK. 
 It must ultimately be to the advantage of the serviceman or woman making the claim for the MOD, through the Veterans Agency, to be able to reconsider a decision and to correct an error without the whole thing having to go through a time-consuming formal appeal. I accept that some internal disputes resolution 
 procedures may seem protracted, but we do not plan for that to be the case. The new arrangements will be in line with wider best practice in industry. There will be clear target time scales for processing cases and we do not anticipate the reviews being protracted. 
 We need to bear it in mind that there will still be a right to appeal against the decision. We must also bear it in mind that individuals may not want to go to appeal. Indeed, some are deterred by the thought of having to attend a tribunal or being involved in the appeal process. We hope that if they need to or want to avoid that, their cases can be reviewed internally. 
 On amendments Nos. 20 and 19, when the Secretary of State decides, for the purposes of the existing war pension scheme, that an injury or death is not attributable or aggravated by service, he must, as the hon. Gentleman knows, notify the claimant of that decision, explaining the grounds on which his decision has been made. It is at that point that the right of appeal arises. No right of appeal can arise until a decision has been made on the claim, and I confirm that that will be the position under the armed forces compensation scheme that we are discussing.

Julian Brazier: I do not understand the Minister's response to amendment No. 19. Before he moves on, will he explain what happens if a response has been made and the case is accepted for a much lower tariff and a less serious injury than the claimant is claiming? We are not lawyers, but as we understand it, there would then be no scope for appeal.

Ivor Caplin: If I understand the hon. Gentleman correctly, the same right of appeal exists when decisions are made on the review of the claim. If the application for review is successful, those rights would not need to be wholly exercised. We may need to have some correspondence to clarify the position. I agree that it is rather complex to deal with in Committee.
 Sections 1, 2 and 3 of the 1943 Act provide a right of appeal to a PAT against a decision made on a new claim under the existing war pensions scheme. It follows that if such a claim were successful, those rights would not need to be pressed. That is why, in my view, amendment No. 20 is not required. I hope that after this interesting and complex discussion, the hon. Gentleman will withdraw amendment No. 16, which appears to be a probing amendment.

Julian Brazier: On amendments Nos. 16, 17 and 20, which deal with the internal dispute resolution process, the Minister has tried to be helpful. He suggested that it would probably be only a single rather than a double stage. He also made it clear that he sees it as simply a paperwork exercise. He has not made any concession on the tight timing, however. Another place may choose to return to the matter, but on the basis of the concession he made, I shall not press amendment No. 16 to a Division.
 I am still not clear about the Minister's answer on amendment No. 19. He promised to write to me, but the central issue on which I need clarification in Committee is whether people would be able to appeal if a claim has been accepted but for a much less serious injury than the claimant had put in for.

Ivor Caplin: I am trying to be as helpful as possible at this early stage—well, it is not early now; it was early when I arrived, under the bizarre sitting times that we have on Tuesdays. I shall not get on my soap box now, Mr. O'Brien, or you will rule me out of order. The simple answer to the hon. Gentleman's question is yes.

Julian Brazier: I am most grateful to the Minister and on that basis I am happy not to press the amendment to a vote. I place on the record that there is a consensus across the Committee. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Julian Brazier: I beg to move amendment No. 21, in
schedule 1, page 6, line 35, at end insert—
'( ) The Social Security Commissioners (Procedure) Regulations 1999 (S.I. 1999/1495) is amended as follows—
(a) after Regulation 24(6)(ff) insert—
 ''(fff) in cases concerning the Armed Forces Compensation Scheme funding for services for representation of a claimant shall be provided by the Community Legal Service under the provisions of section (6) of the Access to Justice Act 1999 (c.22).''
(b) after Regulation 28(1) insert—
 ''(1A) in cases concerning the Armed Forces Compensation Scheme a Commissioner may make a determination or decision including an Assessment.
 (1B) an ''Assessment'' in article 28(1A) has the same meaning as in section 5 of the Pensions Appeal Tribunals Act 1943.''.'.
 In a sense the amendment allows us to repeat the issues that we debated half an hour or so ago under amendment No. 15 to clause 5. Besides the fact that we have introduced an extra stage, there is the question of costs. In response to that debate, the Minister from the Department for Constitutional Affairs told us and his hon. Friends, who rightly raised a number of concerns, again and again that we were dealing with only a small number of cases. If I understand the system correctly, this part of the Bill covers a much larger number of cases. 
 The Royal British Legion says: 
 ''The Bill shifts an appeal against a PAT decision from the High Court to the Social Security Commissioners. There are costs issues. At present the Tribunal Rules provide that the Tribunal pays the costs of the appellant in the High Court. This provision would lapse when the Appeal route is shifted away from the High Court. There would be a major question about representation of War Pension and new scheme appellants in proceedings before the Social Security Commissioners. It would be unrealistic to expect much assistance from a special award of Legal Aid—that might apply to exceptional cases but cannot be expected to be a normal matter. 
 This is tied up with the question of who would actually represent the appellant before the Social Security Commissioner. Most representation at present before the Commissioners is not by lawyers''— 
whereas High Court representation obviously is— 
 ''for instance the normal social security appeal is done on the papers and representations for the appellant are made by a Welfare rights officer etc. Unless some step is taken to support War Pensioners etc before the SSC, the scene might be more or less left to the MoD unilaterally.'' 
I hardly need say that that would be extremely bad for members of the armed forces concerned. 
 We have already observed that the Royal British Legion spends £500,000 a year on legal representation. Where is the support to come from in this unequal 
 battle? The hon. Member for Cleethorpes kept drawing parallels with civilian life. We are dealing with people who have no trade union to provide support for them at the appeals, whose medical records are controlled by the other side, and who may be ill and confused. In his reply to the earlier debate, the Minister said that we were dealing with relatively small numbers, but that we would be dealing with much larger numbers at this stage of the process. He also read out a quotation that mentioned assistance for voluntary organisations. My colleagues would be well satisfied if the Government responded to our amendment by suggesting that, instead of adopting our approach, they would make grants to the Royal British Legion, the Soldiers, Sailors and Airmen's Families Association and other bodies that assist people in such a way. The issue, however, is who will support people who go before the social security commissioners? The whole structure has been put together assuming that there are two sides. Is the ex-serviceman supposed to go on his own, or will the Royal British Legion and the other service welfare organisations, which are already stretched, be expected to provide support?

Eric Joyce: I understand the general thrust of the hon. Gentleman's argument, and I hate to bang on about a point that I made before, but it is clear that ex-service personnel can be represented by trade unions in the capacity that he describes. There would therefore be no requirement for extra state funding. I am sure that the trade unions would be quite happy to represent one of their members who was an ex-service person, whether they joined the union before or after serving in the forces.

Julian Brazier: I am grateful to the hon. Gentleman. I was going to tease two of my hon. Friends that they had other important engagements today as members of the Regular Army and had left it to the Territorial Army to make these points. I am therefore particularly glad that the hon. Gentleman is in his place. He is, of course, right. A small number of members of the armed forces who are members of trade unions, and perhaps those who enter unionised employment, may benefit from having a trade union representative if, some years later, a condition emerges that has not been caught by the new time constraints that the Government are introducing. I entirely agree with him. Faced with these tight deadlines, however, the vast majority of people leaving the armed forces, who are not members of trade unions, have no one else to turn to but the already overstretched voluntary organisations.
 This is a David and Goliath arrangement and we would like to give David a small advantage. We are calling for him to be given legal aid from the common legal fund. The alternative would be for the Government to propose some extra assistance for the voluntary organisations. I look to the Minister to tell us how he thinks that uneven situation, which is a major step back from the current arrangements, should be resolved.

David Lammy: I am not sure whether I am David or Goliath here. Certainly on most mornings I am David. I will try to answer the serious point that has been made. I am glad that the Committee is spending some time on this issue. Most case hearings before the commissioners are heard on paper. In that sense, representation is not an issue. When I talked about the 20 or so cases, I was referring to cases that were appealed from the PAT to the social security commissioners. About 8,000 PAT cases are heard, but 20 cases were appealed to the High Court.
 In two thirds of those 20 cases, the applicant did not request an oral hearing. If there is an oral hearing, it is designed to be user friendly without the requirement of legal representation. Many countries are examining our tribunal system and seeking to replicate it. It has been set up so that people can represent themselves. If an oral hearing is requested, the procedure is very different from that of a High Court hearing. 
 The hon. Gentleman properly stresses the distinction between the High Court and the new system. In that sense, the system is less formal. There are no wigs and gowns. There is far less legalese, specifically to assist those who seek to appeal from the PAT. I should also stress the inquisitorial nature of the social security commissioners. They will question the party and any attendant experts. They will seek to resolve the issues in that questioning manner, rather than with opposing legal counsel presenting technical arguments to a judge. 
 The hon. Gentleman made a point about the British Legion. I want to put on record the work that is done. I am the Minister responsible for legal aid. The hon. Gentleman will understand that quite properly under our arrangements and the arrangements of previous Governments, legal aid is administered separately. It was formerly administered by the Legal Aid Board. It is now administered by the Legal Services Commission. The Government should not get involved in who does and does not get money. That would be improper. 
 The fund does not just facilitate legal aid lawyers. We have had much discussion about lawyers providing publicly funded work. It also funds citizens advice bureaux. It funds law centres throughout the country. I have visited projects in Brighton that have received money from the Legal Services Commission, in towns such as Brighton—very close to the Under-Secretary of State for Defence, my hon. Friend the Member for Hove's constituency—Bromley and, recently, Barnsley. Not-for-profit organisations do get funding from the LSC. If there were an application, it would of course be considered, as long as it met the appropriate criteria. One would expect the LSC to examine that closely. Essentially, however, representation is not strictly necessary, because most of the applicants themselves seek to apply on the papers, as it were, and challenge what they think is the wrong legal interpretation of their case.

Julian Brazier: The Minister has hinted that it might be possible for the British Legion to seek assistance from that fund, but does he accept that today, according to his own figures, thousands of these cases do require hearings? Will he accept also the point of the hon. Member for Brighton, Kemptown that it makes a huge difference in front of the social security commissioners whether one has assistance or not, and that under the current arrangements for appeal to the High Court, people do get their costs paid, so that only a firm commitment to a grant from the British Legion will bring funding anywhere near the current level for existing war pensioners?

David Lammy: The tribunals, our social security commissioners and the PAT examine complex technical matters on behalf of some extremely vulnerable people who require their services, such as pensioners, lone parents and those who have suffered injury at work, throughout the country and across all our constituencies. Many of them are receiving those services as I speak, and they are doing so without representation. That is why I wanted to bring to the attention of the hon. Gentleman the review of Sir Andrew Leggatt, the broad thrust of which the Government are looking to accept, and on the back of which we hope to come forward with our proposals. The Government will be building on his recommendation through the creation of a tribunal service and wider reform of the administrative justice system, and I hope that this will be set out in a White Paper later this year. I am sure that the hon. Gentleman and others will want to return to these issues when we discuss the future direction of the tribunals.
 The hon. Gentleman's amendment also makes some mention of assessments for appeals. It would be wrong to prescribe in primary legislation all the many things that can come before the PAT, which currently considers assessment claims. I reassure the hon. Gentleman that the new arrangements will continue to do so. On that basis, I hope that he will feel able to withdraw his amendments.

Julian Brazier: We have had a number of civilised and useful exchanges this morning, but I must disappoint the Minister. His figures show that thousands of cases go on to hearings. People who can get representation paid for to go to the High Court will now have to go to social security commissioners without support. The Minister said that he would consider the possibility of funding for the British Legion, but there is no firm commitment to provide it. The legion would have great difficulty taking on the extra burden, although I have no doubt that it will do the best that it can with support from the other service charities.
 We are effectively discussing sending ex-service personnel into an extremely unequal contest, which is different from that faced by others. I take the point made by the hon. Member for Falkirk, West (Mr. Joyce) that ex-service personnel are occasionally members of trade unions, but the vast majority will face that contest without the support of a trade union. They will do so from the basis that their employer 
 controls their medical records, and with all the other different circumstances that we have discussed. To deny those people free representation, in any form, without a firm commitment to provide funding for voluntary organisations to offer representation is a major step backwards. Frankly, I think that the House of Commons owes our armed forces more than that. 
 Question put, That the amendment be made:—
The Committee divided: Ayes 4, Noes 10.

Question accordingly negatived. 
 Question proposed, That this schedule be the First schedule to the Bill.

Julian Brazier: I shall make some additional points about the schedule that have been raised by the Royal British Legion. The Ministry of Defence has made it clear that in its view the new compensation scheme is not covered by article 6 of the European convention on human rights. It has said that a dispute about entitlement under the new scheme would not be a dispute about a civil right or obligation under that article. It has also argued, in current litigation under the war pensions scheme, that the present war pensions scheme is not covered by article 6. However, that view contradicts the British Government's submission to the European Court of Human Rights in the case of McGinley and Egan v. the UK, which conceded that article 6 applied to the war pensions scheme.
 The wider point is that the approach is surprising. Effectively, it conceives of rights under the new compensation scheme as merely matters of contractual right. Many earlier remarks made by the Minister suggested that pensions appeal tribunals are like any other work tribunal, and that there is no difference for those who have served in the armed forces. However, those people are not allowed to speak out politically while they are serving—although I know that the hon. Member for Falkirk, West has a courageous record in that respect—and endure the other disadvantages that we have discussed. [Interruption.] I was one of the few Tories who had sympathy for the hon. Gentleman; I was the first rebel in the new intake, as a Conservative, so I know what it is like to be on the receiving end of a disciplinary system. That would be analogous to rights under an occupational pension scheme that is part of the package of terms and conditions of employment. 
 The argument is that such rights are private, being purely issues of contract of employment without a public element. That is not the traditional understanding of Labour or Conservative Governments; indeed, the 1943 legislation was passed under a coalition Government and all the parties represented in this Committee had Members among them. It seems extraordinary to move away from the understanding that this is a public matter to it becoming effectively a private contractual arrangement, but I am advised that that is what refusal to accept article 6 will mean. 
 What is intended is a two-stage process; in the first stage, the claimant would dispute the Minister's decision. The Minister would then reconsider the decision disputed. There would be a compulsory review stage and the review would be described as an internal appeal. Such a description gives a false picture because a review in the Ministry of Defence will have no independent or judicial element. At the second stage, the claimant might decide to make an appeal if the Minister's review did not resolve the dispute. 
 The Royal British Legion asks whether the words of the Bill would give the PAT any jurisdiction to hear appeals against review discussions, if that is what the new scheme provides. The MOD says that it does not perceive a problem, but there obviously is a problem if there is a doubt about the tribunal's power to deal with an appeal. 
 In making my final point, I am again indebted to the British Legion. Experience of the war pensions' system suggests that the use of review may confuse many claimants about the exercise of their right to appeal to a tribunal. Under the existing arrangements for war pensions the Secretary of State has a power to review previous decisions. The power is often used after the claimant has formally disputed a decision. Typically, the claimant will write to say that he or she wishes to appeal. The difficulty is that many claimants believe that having already written to the Secretary of State disputing a decision, they do not need to write to him again if the decision is reviewed but left as it is. They believe that their original letter stands as an appeal. As a result, some would-be appellants fail to make an appeal in time. Compulsory review as an essential preliminary to an appeal effectively requires the claimant to appeal twice, the first appeal being treated only as an application to review and a further appeal being required to trigger the appeal process. In turn, that relates to the general problem that while the idea of appeal is widely understood, that of review is not. To require a claimant to write to ask for a review of the decision disputed by them would not be understood by many claimants. 
 The British Legion's points really boil down to the following: the Minister's quotes in earlier debates, and his way of thinking, are all about turning the proposal into part of the contractual arrangement in the civilian appeals process, as though there is no special public element involved in military compensation claims. I do not know whether Sir Andrew Leggatt, or any of the other people who made recommendations, ever served 
 in the armed forces, but Labour and Conservative Governments have always recognised that a public element is involved. At a working level, the new arrangements are much more complicated and more difficult for people to understand. There is far more scope for people to slip up and they will have less assistance along the way.

Colin Breed: I shall make a few brief comments on the general principles of the schedule. I accept that the Minister wants to ensure as far as possible that claimants can make their own representations and present their case. I, too, would not want to encourage the involvement of legal representation, but we must recognise the specific references in new paragraphs 6A and 6B. New section 6A(3) states:
 ''If each of the parties to the appeal expresses the view that the decision appealed against was erroneous in point of law''. 
That phrase is repeated twice in new section 6B. One might expect that someone who expressed why they believed a decision was erroneous in point of law had some understanding of the legal processes. One wonders how they could do so in their own capacity without at least some involvement or advice in legal terms to enable them to do so. 
 In my limited experience of appeal processes generally, the incidence of which seems to be increasing, decisions often rest on the interpretation of a point of law. Many appellants go in rather naively, expecting to receive what they consider to be natural justice for their case, only to find that although everyone appears sympathetic to them and understands precisely what they are getting at, regretfully the interpretation of the narrow point of law finds against them. I understand the theory and the hoped-for practice. I simply wonder whether the measure will work in practice as the Minister hopes. 
 New section 6D(4) states: 
 ''If it appears to a Commissioner that a matter before him involves a question of fact of special difficulty, he may direct that in dealing with that matter he shall have the assistance of one or more experts. 
 In this subsection 'expert' means a person appearing to the Commissioner to have knowledge or experience which would be relevant in determining the question of fact of special difficulty.'' 
The idea of expert witnesses has undergone a bit of a transformation in recent times. As a lay member of the General Medical Council, I see a number of cases in which people have used medical gentlemen and women who are expert in their field, only to find that there is a counter-expert. Remarkably, expert advice rather depends on who is paying the expert. 
 If we arrive at a situation in which the commissioner is the sole person to decide who the expert is, one wonders whether, to ensure equity and fairness, the expert should be agreed by both sides or whether both sides should have an opportunity to have their own expert witnesses. I know that that would involve additional cost, but the clause is drawn rather narrowly, enabling the commissioner to decide whether an expert witness is required. There should be at least some input from the other side, perhaps in the 
 decision as to who the expert is. Perhaps the other side should be able to have its own expert witness, for which it would be recompensed. 
 In theory, the narrow provision may be right. In practice in recent times, however, there have been conflicting expert witnesses, which sometimes adds to confusion rather than allaying it. The clause looks back to the golden age of expert witnesses and does not recognise the current practice of expert witnesses appearing at tribunals. 
 Question put and agreed to. 
 Schedule 1 agreed to.

Clause 6 - Royal Patriotic Fund Corporation

Question proposed, That the clause stand part of the Bill.

Ivor Caplin: I shall briefly introduce the clause. The hon. Member for Faversham and Mid-Kent (Hugh Robertson) is not here, but he was the only person apart from my right hon. Friend the Secretary of State to raise it on Second Reading. The clause provides for the property and functions of the Royal Patriotic Fund Corporation—a charitable body established under the Patriotic Fund Reorganisation Act 1903 to assist widows and other dependants of members of Her Majesty's armed forces—to be transferred to a successor body and for the corporation to be dissolved.
 There are six subsections in the clause, and schedule 2 is linked to it, but I do not intend to go through them all. Subsection (1), which is the main provision, enables the Secretary of State to make an order transferring or providing for the transfer of the property, rights and liabilities of the corporation to a charity registered under the Charities Act 1993 established for the assistance of widows or widowers, children and other dependants of former members of the armed forces or reserve forces. 
 With those comments, I commend the clause to the Committee.

Gerald Howarth: I am sure that the Committee is grateful to the Minister for telling us about the Royal Patriotic Fund Corporation. It is a splendid title, and one to which every Tory should subscribe, as it has everything in it: royal, patriotic and fund.
 Will the Minister assure the Committee that he will keep us posted about the development of the change that he has described? It should not just happen and be forgotten about. The House of Commons should be kept informed.

Ivor Caplin: I am happy to give that commitment, and will ensure that the House of Commons is kept informed.
 Question put and agreed to. 
 Clause 6 ordered to stand part of the Bill. 
 Schedule 2 agreed to.

Clause 7 - Amendment and repeals

David Lammy: I beg to move amendment No. 22, in
clause 7, page 3, line 23, at end insert—
'( ) In Schedule 4 to the Social Security Act 1998 (c.14) (Social Security Commissioners), in paragraph 3(1) (expenses of attending appeal proceedings), after ''under section 14 of this Act'' there is inserted '',under section 6A of the Pensions Appeal Tribunals Act 1943''.'.
 I referred to this amendment earlier. Paragraph 3(1) of schedule 4 to the Social Security Act 1998 provides for the expenses of applicants appearing before the commissioners. The effect of the provision is that persons attending commissioner hearings qualify for travelling allowances and others covering overnight stays and subsistence. 
 As we have discussed, the Bill introduces a new appeals jurisdiction to the commissioners and not to the High Court. The new PAT jurisdiction needs to be explicitly mentioned in the expenses provision to extend the expenses regime to appeals to the PAT. The amendment will add the reference 
''under section 6A of the Pensions Appeal Tribunals Act 1943'' 
to the relevant provision of the Social Security Act 1998. Section 6A is the new section inserted by the Bill and enables appeals from the PAT to the commissioners. That reference allows the expenses to be made. 
 In moving the amendment, it is right to say that I am grateful to the hon. Member for Aldershot for his amendment, which alerted us to the oversight.

Gerald Howarth: It is seldom in Committee that the Opposition get any credit. [Interruption.] I have to say in response to the Minister's protestations that I sat for a long time on the Government Benches. It always struck me that one extraordinary thing about the House of Commons was the idea that the Opposition never had any good ideas while the Government could improve Bills by a modest 200 or 300 amendments here or there.
 That always seemed to be bizarre, and here is a case in which the Government have recognised that there is a lacuna—the Minister with his legal knowledge will correct me if that is the wrong word—in the processes. We are grateful that the Government have responded and saved themselves some embarrassment in finding that their legislation was inadequate. We have more contributions to make, but we are pleased to have played a modest part in ensuring that appellants can access the funds that are available.

Colin Breed: I welcome the Minister's recognition of that point and want to cover a couple more. He mentioned the expenses of coming to London. I hope that as far as possible hearings will be held around the country. For people down in my part of the world, in Cornwall, the concern is not necessarily the cost of travel or the overnight accommodation, but the physical time that the whole process will take. For some people the whole idea of having to spend a couple days away is quite off-putting. It may even mean that
 they have to miss hospital appointments and everything else. The ability to have more geographically friendly tribunals needs to be taken into account, even though there may be the costs of bringing people down.
 Something that was mentioned briefly earlier was the availability of the information on expenses. I know that furious attention will be given to the MOD's website, but it is not necessarily the place that many of my pensioners or people who would wish to have such information would get it. The old idea of having a leaflet telling people what they may legitimately claim and how to go about it, in very simple language, would be a great help to a lot of people in pursuing their cases in the way that the Minister would like. If the Government were to produce a brief leaflet giving that information and making it available as standard to people who are going into this process, that would be very helpful. 
 Amendment agreed to. 
 Question proposed, That the clause, as amended, stand part of the Bill. 
 Mr. Caplin: I wish to speak briefly to clause 7 stand part, in particular the forfeiture rule that is covered in subsection (1). 
 As hon. Members on both sides of the House will be aware, the forfeiture rule establishes the public policy that a person who has unlawfully killed another must not benefit from that death. The rule applies to benefits or pensions to widows, widowers or unmarried partners so that no benefit or pension should be paid if an individual unlawfully kills their spouse or partner. 
 This clause provides that certain provisions of the Forfeiture Act 1982 apply to benefits payable under the new armed forces pensions and compensation schemes. As a result, if in any case the question arises that a widow's, widower's or unmarried partner's benefits under the pensions or compensation schemes should be forfeited owing to the unlawful killing by them of their spouse or partner, the question will be referred to a social security commissioner for a decision. 
 Question put and agreed to. 
 Clause 7, as amended, ordered to stand part of the Bill. 
 Schedule 3 agreed to.

Clause 8 - Commencement

Question proposed, That the clause stand part of the Bill.

Ivor Caplin: With regard to the provisions set out in clauses 1, 2, 3 and 4, which we have dealt with in Committee, when I announced the details of the armed forces pensions scheme last September I said that we planned to introduce the new pensions scheme arrangements for new entrants on 6 April 2005. That remains our intention, subject to this legislative process. We are also planning to introduce the new
 armed forces compensation scheme arrangements, covering all personnel, from that date as well. As indicated, those dates are subject to legislation.
 Under clause 6, the Royal Patriotic Fund Corporation is now working with its professional advisers on the creation of a new charity, to be the transferee of its properties and liabilities. It is expected that the commencement order will be made at the earliest opportunity, once an appropriate transferee is established. As I said earlier, I will be happy to ensure that the House is informed about that.

Gerald Howarth: I do not want to delay the Committee on a two-line clause, particular as new clause 8 deals with the transitional arrangements, which are of concern to all hon. Members. However, consequences flow from what the Minister announced.
 It is true that the Bill is simply enabling legislation. It has been confirmed to the Committee that the coming into force of the legislation has been fixed at 6 April 2005, but nothing in the Bill says when it is intended that it should come into force. We have only the Minister's word for it. The Minister is being ambitious in seeking to bring in pension arrangements in April next year. I should be grateful if he would give us some indication of how he reckons to organise their coming into effect. 
 On 7 April 2005, the Minister will be faced with those who have newly joined the armed forces, who will be subject to pension arrangements under the new scheme; but everyone else—about 200,000 other people—will be subject to the arrangements that apply under the present scheme. However, he will be in some difficulty at one point—it is not an insuperable difficulty, as it can be dealt with by fiat and ex gratia payments or similar means. 
 If we happen to be engaged in hostilities, it is unlikely that those who join on 6 April next year will be sent straight to the front line, but in three or four months' time they may be. A new recruit who is killed when on operations—or even if he was killed in a training accident, which could happen even sooner—would give rise to an attributable benefit. If two soldiers are injured or killed and one had just joined up and had no alternative but to come under the new system but the other was already a member of the armed forces and had not yet had the option to change to the new scheme, their widows would be eligible respectively for a one-and-a-half times salary death-in-service benefit or a four times salary death-in-service benefit. That will clearly give rise to substantial anomalies, which will be picked up by those who follow such things. 
 We shall go into the transitional arrangements in more detail later, but now that we know that 6 April 2005 is the decisive date, it would help if the Minister were to say how far he has proceeded in drawing up the rules and how much time he will give people to decide. That is not much of a problem for compensation, but it clearly is a problem for pensions. If he can give the Committee an early indication now, it would be helpful. After all the delays to the implementation of the new proposals, I do not complain that the Minister is trying to make progress swiftly. I have publicly 
 acknowledged that he has grasped the nettle on the matter, so I shall not chide him unduly for continuing at a pace. However, he will recognise that some practical issues must be addressed. It would be helpful if he could tell us how he plans to put the procedures in place in order to meet the commencement date that he has just cited.

Ivor Caplin: I am happy to try to do that. I shall not deny that it is a tight programme, both in terms of completing the passage of legislation—that may not happen until October—and of implementing the new pensions arrangements. I shall focus on the pensions arrangements, because the compensation arrangements apply to everyone.
 On pensions, I should repeat that it is a new scheme for new entrants. There will be an opportunity for existing members of the armed forces to exercise a choice, and we are considering the new arrangements for personnel management, which will enable that choice to be made as easily as possible. Ultimately, individuals will decide what is best for them, with their families and partners. I am confident that we can achieve the timetable that we have set out. We are already undertaking a communications process; I do not know whether it was for my benefit, but when I was in the west country a few days ago, the leaflets advertising the pensions scheme were on everyone's desks. I am pleased that they are at least being distributed. We have a communications strategy in place. Obviously, we are holding back slightly because we want it to get through some part of the legislative process—although I am not pre-empting in any way the right of both Houses to have their say on the legislation, which I regard as an important part of the parliamentary process. I hope that the hon. Gentleman will forgive me if I do not go into too much detail, but I can reassure him on the points that he made. Perhaps we shall have a fuller debate on the matter under new clause 8. 
 Question put and agreed to. 
 Clause 8 ordered to stand part of the Bill. 
 Clause 9 ordered to stand part of the Bill.

Clause 10 - Orders

Amendment made: No. 14, in 
clause 10, page 3, line 33, at end insert— 
 '( ) An order under this Act may make different provision for different purposes.'.—[Mr. Caplin.] 
Question proposed, That the clause, as amended, stand part of the Bill.

Ivor Caplin: I should like briefly to introduce clause 10, which establishes how the Secretary of State's enabling powers will be used to support secondary legislation—in other words, through the statutory instrument process. That process is consistent with other public service schemes and provides a greater degree of parliamentary scrutiny than is available under the current pension arrangements for the armed forces. I consider the best approach to be one of
 practical balance of parliamentary scrutiny and the need for regular updating of obscure rules—we discussed those at length under clause 1. I believe that the alternative approach that would, for example, demand more parliamentary time, would be more likely to result in delaying the improvements that we want to introduce.

Gerald Howarth: I am grateful to the Minister for that explanation and for his ritual protestation that the scrutiny of the new arrangements proposed under the Bill will be more extensive than that under the current arrangements. I take that point entirely on board. However, I do not think that he dealt with amendment No. 14, and it would be helpful if the Minister could give some indication of what he had in mind in that amendment. It is yet another sweeping generality; that is a characteristic quality of the Bill, on which I might have more to say later.

Ivor Caplin: For a moment, I thought that I was in a parallel universe. I recall that we debated amendment No. 14 under, I think, clause 1. I am sure—I will go through Hansard in a moment—that I put the details requested by the hon. Gentleman on the record at that time.

Gerald Howarth: We will all have enjoyable lunchtime reading to remind ourselves of the events that took place at the outset of the Committee, which was a full two weeks ago. We will be able to refresh our memories.
 The substance of the matter goes to the heart of some of our complaints. The Minister has said that a greater degree of transparency and of scrutiny will be made available to Parliament than has hitherto been the case. Nevertheless, he knows that there is widespread concern that everything is being done by secondary legislation and that very little is on the face of the Bill. 
 Subsection (5) states, quite rightly, that an affirmative resolution is required in the House for anything that 
''adds to, replaces or omits any part of the text of an Act'' 
and that a draft of the instrument has to be laid and approved by an affirmative resolution of the House. However, so little is explicit in the Bill and the powers granted to the Secretary of State are so extensive that it is hard to imagine any textual amendment that might be required that would give rise to an affirmative procedure. We really need to consider subsection (4), which states: 
 ''A statutory instrument containing an order under this Act is to be subject to annulment in pursuance of a resolution of either House of Parliament.'' 
In other words, it will be subject to the negative procedure. I am at one with the Minister that such detailed legislation cannot be encompassed in every detail on the face of the Bill, but we are disappointed that no cardinal points are included. The clause illustrates the practicalities of what will happen when 
 the Government finally table in an appropriate legislative form the detailed schemes that they have already provided in the form of the framework documents. 
 It is disappointing that we could not have had some cardinal points enshrined in the Bill and that those cardinal points could not be subject to the affirmative procedure. Something as fundamental as the early departure scheme, which we will discuss later on, should have been on the face of the Bill, along with a number of key points, the variation of which is regarded by many of us as a material issue. 
 Even at this late stage, the Government would be well advised to think about how they might address that issue when the Bill comes before the other place. In the other place are the serried ranks of gentleman whose rank exceeds that even of the Minister himself. They have huge experience and are unconstrained by obeisance to him—they have left the services, gone to the other place and are now completely free agents. I suggest to him that, in anticipation of what might happen at the other end of the Corridor, the MOD might consider drawing up some of the cardinal points—I would not call them the immutables—that could be subject to change in due course, but, ideally, only after proper debate in the House under the affirmative resolution procedure. If he does not do that, I fear that the serried ranks of generals, air marshals and admirals might get to work on the proposals and say that they want further protection, notwithstanding the fact that such protection has not been available in the past. 
 The Bill is new, the Government are proposing a new scheme and we face a new beginning. That is why they would be well advised to take the position that I have described. 
 Question put and agreed to. 
 Clause 10, as amended, ordered to stand part of the Bill. 
 Clauses 11 and 12 ordered to stand part of the Bill.

New Clause 2 - Re-employment of armed forces pension recipients

'(1) Where— 
 (a) the Secretary of State determines for reasons of general personnel management that a person shall cease to be employed as an active full time member of the armed forces and therefore grants that person Early Retirement Income in accordance with Schedule [Armed Forces Pension Scheme], and 
 (b) the person concerned is re-employed for service under the Crown, including for service with the armed forces in another capacity, 
 such re-employment will be permissible without abatement of Early Retirement Income. 
 (2) In this section ''reasons of general personnel management'' means decisions reached by the Secretary of State in his absolute discretion as to future requirements of numbers in particular roles and ranks.
 (3) In certifying reasons of general personnel management as the grounds for granting Early Retirement Income the Secretary of State's decision shall be conclusive and binding grounds for excluding the Early Retirement Income in this case from rules otherwise applying to pensions.'.—[Mr. Gerald Howarth.] 
 Brought up, and read the First time.

Gerald Howarth: I beg to move, That the clause be read a Second time.

Bill O'Brien: With this it will be convenient to discuss the following: New clause 9—Early departure payments—
 'A system of Early Departure Payments (EDPs) for those serving 18 years and having reached age 40 (whichever is later) will be payable until the preserved pension comes into payment at age 65.The Secretary of State shall by order set out details of these payments.'. 
New clause 26—Early departure payments (No.2)— 
 'Any Early Departure Payments (EDPs) established under section 1 of this Act as part of the Armed Forces Pension Scheme shall include the following provisions— 
 (a) there will be a qualifying period of service for the EDP, common for Officers and Other Ranks. 
 (b) the EDPs will be payable from age 40, but only on completion of 18 years of service (the 40/18 point); 
 (c) it will be paid to those leaving from that point and, as now, personnel will be eligible whether they leave for Service or personal reasons; 
 (d) from the 40/18 point, there will be immediate entitlement to a tax-free lump sum equivalent to three times the individual's accrued annual preserved pension value; 
 (e) in addition, at the 40/18 point, there will be an entitlement to an annual payment of 50% of the individual's accrued preserved pension entitlement. This payment will remain at the same level for those leaving at that point and, between the ages of 40 and 55, will not attract index-linking for inflation; 
 (f) for each year by which the individual's retirement is deferred after completing the 18 years of qualifying service, the value of the annual payments will increase by 1.66% up to age 55, at which age the annual payment will be 100% of the preserved pension entitlement. Until age 55, this payment will remain unchanged and will not attract index-linking for inflation; 
 (g) from age 55, the payments will be adjusted to take account of the changes in the Retail Price Index (RPI) since the point at which the EDP was originally taken and thereafter on an annual basis until the preserved pension comes into payment at age 60. 
 (h) existing policy on abatement will apply to Early Departure Payments if a recipient is subsequently reemployed in the public services. 
 (i) a preserved pension will be paid from age 60 onwards, with its value adjusted fully in line with RPI from the last day of service. At this point, a pension lump sum of three times the individual's preserved pension entitlement will also be paid.'.

Gerald Howarth: You will see before you, Mr. O'Brien, a series of new clauses now that we have galloped through the Bill. That picks up on the point that I was just making, which is that there is so little in the Bill that we have had to table a series of new clauses to probe the Government for more detail about what precisely they propose and to try to introduce safeguards for the members of the armed forces whom the legislation will affect.
 We are now on the first of those groups. New clause 2 deals with those who have served in the armed forces and who are then re-employed under the Crown and, 
 in particular, in the armed forces. New clause 9 deals with the early departure payments, and new clause 26 sets out some of the key points of the early departure payment scheme that the Government have made available to us during these sittings. New clauses 9 and 26 concern the early departure scheme. New clause 2, however, is slightly different and is an attempt to deal with those who have left the armed forces and are drawing a pension, but whom the armed forces then re-engage to fill a position. I have in mind those who used to be called the reserve officers, of whom there are about 2,000. They are no longer called reserve officers—I cannot remember what new title the Minister has given them—but they still perform a valuable role in the military community. 
 I shall single out a case—that of Colonel Jack Matthews, who is the adjutant of the Aldershot garrison. He formally left the services about nine years ago and has been a retired officer since then. I have observed the way in which he has been the fixed point in the garrison. The garrison commanders tend to serve two or three-year tours of duty and then move on. Meanwhile, Colonel Jack Matthews is there throughout, providing stability and continuity. He provides a knowledge base for the garrison, which, I remind the Minister, is the home of the British Army, and is therefore a big operation. About 5,000 troops are stationed there, so it is hugely beneficial to have someone like that in place. I single him out because I know him and know what he does, but the role that he performs is replicated throughout the country by approximately 2,000 people. 
 In parentheses, I note that I regard the decision of the Ministry of Defence to open up those positions to civilians as a retrograde step. The whole purpose of such positions is to seize on the huge repository of wisdom in people who have served in the armed forces, retired and then come back and been re-engaged on slightly different terms. I think that that decision is regrettable. I recognise, Mr. O'Brien, that that matter is not strictly within the purview of our discussions on the pension arrangements, but nevertheless I should like it to be put on the record that I consider the decision to be a mistake. I ask the Minister to reconsider it. 
 The issue that we are trying to address by tabling new clause 2 is that, under the current arrangements, pay and pension is not allowed to exceed the previous salary. Typically, retired officers have served quite a long time so they have a pretty good pension, and they are paid a correspondingly low salary—low in the sense that if that were their entire income, it would not be enough for the responsibility that they assume and for the tasks that they carry out. The fact that they are in receipt of a pension is taken into account, but they are not allowed to earn more than they were earning at the time when they left the service. To some extent, I can see the point of that but, given the valuable role that such people play, it is unfortunate that that condition applies. The reason that we want to press the new clause is that I understand that that condition will 
 also apply to the early departure payment scheme. However, I do not understand exactly how that will work. 
 I hope that the Minister will be able to give me an indication of the way in which that scheme will operate the abatement in respect of retired officers, or whatever they are now called. Under the new early departure scheme, there will be no index linking of early departure payments between the age of 40—or 18 years' service—and the age of 55. Therefore, there will be a flat payment throughout that period until the preserved pension kicks in at 55. After that, I understand that it will be uprated. 
 In the meantime, the Committee would like to know what will happen in the following example. Let us say that a retired officer leaves on a pension of £10,000 a year, which is fixed in term and his leaving salary was £35,000. He will not be able to be paid more than £20,000 for his retired officer role for the next 15 years. He is not allowed to earn more than the salary that he was earning when he left the service. That seems grossly unfair. It may be that I have not understood the scheme particularly well, but it would be helpful if the Minister could explain in detail how the Government see it working in practice. 
 I turn to new clauses 9 and 26, which are the substantial elements of our debate. It is unfortunate that no details of the early departure scheme were available to the House on Second Reading. I can do no better than quote the hon. Member for Dunfermline, West (Rachel Squire): 
 ''It is unacceptable that the Government failed to publish details of their proposed early departure scheme before the debate. We know that the value of the payments will be less than before, but we do not know whether they will be protected from inflation. —[Official Report, 22 January 2004; Vol. 416, c. 1507.] 
The Minister can expect that the House will want to pay some attention to this issue on Third Reading, when the proposals can be discussed not just by members of the Committee who have had the benefit of seeing them, but by the House generally and, in particular, members of the Defence Committee, who are not represented here. The hon. Member for Portsmouth, North (Syd Rapson) is a distinguished former member, and I had the pleasure of serving on that Committee with him. 
 The fundamental issue here is that the Government have been constrained by the requirement that all the changes to be made in the armed forces pension scheme are to be governed not by what is best for the armed forces, but by the overarching requirement of cost-neutrality. The Defence Committee accepted that that is the basic framework within which the Government are operating. It did not believe that it is ideal to review pension and compensation arrangements for our armed forces when they are being called on to serve in action overseas more than at any time in the memory of most of us in the House, but that is a constraint that the Government imposed and the Committee took that into account.

Julian Brazier: As was observed the other day, cost-neutrality is a curious idea because it does not take into account the fact that there will be a steady reduction in the size of the occupational pension because of the decrease in the size of the armed forces and a huge reduction in the cost of war pensions. None of that is carried into the equation, whereas the additional costs in terms of longer lives are put into this so-called idea of cost-neutrality.

Gerald Howarth: My hon. Friend makes an important point. We will have a further debate on these matters when we come to issues of longevity, although I am grateful to him for making that observation at an early stage in our discussion of these proposals. The Government had decided that instead of salami slicing the system and fiddling about here and there, they would take the bulk of the savings from the immediate pension arrangements and institute a new substitute system of early departure payments.
 I would be grateful if the Minister told us how it can be proposed that the savings will be around one third—about £100 million a year—when the figures I have seen, which were helpfully provided by the Forces Pension Society, indicate that at best the savings are likely to be about 25 per cent. I do not see how those two figures square. As we are the first people to have the opportunity to consider in detail the Government's proposals to replace the immediate pension, it is important that we understand that their figures are right. 
 I am not at this stage saying that the Government have it all wrong—I do not know—but I cannot square the figures I have seen with the savings that the Government claim. Given the basis on which the review has been conducted in respect of cost-neutrality, if in replacing the immediate pension scheme the early departure scheme does not raise significant amounts of money for the improvements to be made elsewhere, the Government will have a problem balancing their books. So, I hope that the Minister will be able to shed some light on that. 
 When the Minister wrote to us, he kindly set out the details of his proposed scheme. They were quite clearly written—they were not in obscure English—and relatively easy to understand, for which I am grateful. He said that the need to replace the current arrangements arises for three reasons. This is the first: 
 ''Inland Revenue proposals set out in a recent consultation paper will not allow pension benefits to be paid from a tax approved pension scheme before age 55''. 
That is why we have to make the change from a pension-based scheme to an income stream, which is how the Government describe it. 
 The second reason advanced by the Government is that the 
''current IP makes unfair distinctions between Officers and Other Ranks in terms of different accrual rates and qualifying periods, and provides a level of compensation that is no longer considered appropriate given improvements in the transferable skills of those leaving at mid-career since the current arrangements were introduced in 1973''. 
I shall have more to say about that in due course. 
 This is the third reason advanced by the Government:
 ''The arguments for redistributing resources from the IP to allow benefit improvements elsewhere in the scheme, notably to dependants' benefits, and to help cover the costs of pensioners living longer''. 
As my hon. Friend the Member for Canterbury rightly pointed out, there is also a reducing pool because the Government have cut the armed forces. Therefore, there will be fewer people to be paid in due course, so I am not sure that the argument stands up. There is also a view, as the Minister knows, that it should not be down to current members or those who will be members of the scheme to pay for increased longevity. The Government should make some contribution.

Ivor Caplin: On that last point, has the hon. Gentleman had the opportunity to consider how much—in pounds—he thinks the Government should contribute?

Gerald Howarth: No, not yet. This is a complex area because it involves actuarial calculations. I am told that the definition of an actuary is one who finds accountancy too exciting, and I am not an accountant, never mind an actuary. As the Minister knows, this issue was addressed in the Select Committee and there was a feeling that the armed forces were being required to pay for increased longevity. We have been calculating how best to arrive at a balance and how we apportion responsibility for who pays what. A pension is deferred income; the pension is contributed to by the employer and by the employee—it a question of getting that balance right.
 It is fundamental to recognise the fact that the new early departure payment scheme is not designed for the benefit of the employee; it is a manning tool. It is a device that enables the Government to pull through those whom they have spent money on in training and whom they wish to retrain as well as a means by which those whom they do not want to retrain—those who are perhaps less agile or surplus to requirements—can be released from the service of the Crown. The scheme is therefore entirely for the Government's benefit. 
 The fact that in framing the scheme the Government have had regard to the difficulties faced by those who are heaved out before they have served a full career and are therefore entitled to a full career pension—which they will not get in any case unless they are a four-star general or of equivalent rank—and have, as a responsible employer, recognised the fact that they have some obligation should not distract us from the main objective, which is to ensure that the Government get into the armed forces the people they need. They need specialists on whom they have spent a lot of money in training, but they may not need squaddies of 45. The scheme enables the Government to weed those people out. 
 The Select Committee expressed particular concern in its report, as it did not have the advantage, which this Committee has, of seeing the proposals that have been tabled as to how the payments would be uprated for inflation. According to the MOD website, the Minister has said that
''while the precise shape of the new EDP is still to be worked through with the three Services, we do not propose to uprate payments in line with the Retail Price Index (RPI) from age 55, as now. However, there is a possibility that income payments would be increased later in life when second careers are less likely.'' 
I think that I am right in being able to welcome the fact that in the letter that the Minister sent on 2 February to the Chairman of the Defence Committee, he made the point that it is now proposed to uprate the payments from age 55 in line with the RPI. However, the entitlement to an annual payment of 50 per cent. of the individual's accrued preserved pension entitlement will remain the same for those leaving at age 40, the 18 years' service point and 
''between the ages of 40 and 55, will not attract index-linking for inflation''. 
That is a departure from the current scheme, where it is upgraded for inflation. That will cause particular concern. 
 As has been said, this is a potential source of substantial savings for the MOD. It is a hidden cut in benefits because it allows the MOD to reduce the value of early departure payments over time without reducing the headline figure that is paid. I hope that the Government can address that point. 
 There is also the issue of the pension trough; I hope to be able to table a new clause so that we can discuss it later. As the Minister knows, the real value of an early departure payment to a person who leaves the armed forces just before a period of high inflation can be substantially devalued over a short time, whereas someone who leaves at the top of an inflation curve will receive an early departure payment of higher real value over a longer period. The Select Committee recommended: 
 ''If early departure payments are not protected from inflation, the real value of these payments over time to personnel leaving at different points is likely to differ substantially, as the rate of inflation varies. This may well lead to future grievances.'' 
I hope that the Government can look favourably on proposals that would prevent the creation of a new set of grievances equivalent to that which arose over the pensions trough. The Government are predicating all their arguments on the basis that there will be a low rate of inflation such as that which we currently enjoy, thanks to the former Chancellor of the Exchequer, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who set the framework that this Government were happy to remain within until a couple of years ago.

Ivor Caplin: I cannot allow the hon. Gentleman to get away with that. There were double-digit interest rates under Conservative Administrations, and the right hon. and learned Member for Rushcliffe did not give us a golden legacy. Hard work and the independence of the Bank of England, along with other economic measures taken by my right hon. Friend the Chancellor, have created the low inflation that we anticipate will be here for many years to come under this Government.

Bill O'Brien: Order. That evens the score, so we will now stick to the new clause.

Gerald Howarth: I know that it is a cardinal principle that one does not challenge the referee, Mr. O'Brien, but I am not sure that the score was evened. I thought it was one and a half to one in favour of the Government. The public understand who is responsible for the establishment of the sound British economy. However, in order not to incur your wrath, I will not pursue the point.
 It is important to understand the effects that the new scheme will have on individuals. It is one thing to look at the matter in the round and on the basis of headline figures, but quite another to see exactly how it will affect people in their everyday lives. In respect of that, I am again indebted to the Forces Pension Society. It accepts the Government's cost-neutrality constraint and it is not opposed to the principle of the early departure payment scheme, but it has drawn attention to what will happen. 
 The lump sum at discharge of a staff sergeant who retires at 40 on a pensionable salary of about £31,000 will remain the same, but his annual pension payment under the new arrangement will be about half what it is under the current one. In his case, assuming that he survives to age 75, the saving over the lifetime would be about £72,500, without allowing for inflation. That is where my figure of 20 per cent. comes in. 
 I understand that the calculated saving under the new scheme, compared with the old scheme, is about 20 per cent., which does not get us up to the one third saving that the Government propose to make out of the scheme. If that same staff sergeant retired at 54, he would receive a higher lump sum payment under the new arrangements, but his annual pension would be about £3,000 less than he would get now. 
 The Government say that all the proposals have been agreed by the service chiefs. I am not sure whether they are saying that service chiefs are responsible for drawing them up or that service chiefs have put the chop on them. I suspect that it is the latter. However, we are in no position to establish what effect the proposals will have and we will not see it for some time, but given the pull-through effect that the Government are anxious to achieve—the retention of skills that they want to bring on rather than ditch early—I am not sure how valuable it will be. 
 Having considered the predicament of the officers, I foresee family tensions. Under the new scheme, a lieutenant-colonel on a salary of about £61,000 who joined at 21 and retired at 40 would get a lump sum payment of less than £50,000, compared with about £55,000 now, whereas his annual pension payment would fall from £18,300 to £8,200. Those are substantial reductions. People will have to pay a big price. Of course, the Minister will not see the effects: he will long since have been picking up his parliamentary pension, which people outside this place might think is more favourable than any other pension scheme. 
 I know that the Minister is young, but we are talking about people who have recently joined the service and will be eligible to leave in about 20 years. We must consider what will be the effect of these proposals. If that lieutenant-colonel were to retire at age 54, a year before final retirement, he would get roughly the same lump sum payment under the new scheme as now—about £85,000—but his annual pension payment would be substantially less at £21,000 rather than £29,000. 
 I put it to the Committee, especially the Minister and the hon. Member for Cleethorpes, that the spouses of some servicemen and women will say to them, ''What is going to be the position if you stay on until you are 47? What are your chances of getting a job at 47? You are going to get £14,000 a year pension. What are your prospects of getting a job then? Much better to go now when you are 40. Quit now. Get out into the private sector; get yourself a decent job.'' Between the ages of 40 and 45, or 50, is the most difficult time for people to change career. What the Minister is proposing is a substantial reduction in income for people who are at that stage of life and who have given service to our armed forces.

Ivor Caplin: I ask the hon. Gentleman to consider the transferability of skills in respect of members of our armed forces. I think everyone will acknowledge that it is far greater today than 20 years ago. I anticipate that that development will continue.

Gerald Howarth: I do not deny the Minister's point, but it is patchy.
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
Adjourned till this day at half-past Two o'clock.